Iran
has sea and land borders with 15 countries. This number of neighbors has
become a positive leverage for Iran to counter the US sanctions. According
to official statistics, Iran’s total trade with these countries exceeds $36
billion. The figure on the one hand reflects the potentials of trade with
its neighbors, and on the other hand shows the correct targets of the
government in this field.

For the first time, Es’haq Jahangiri, the First Vice President unveiled the
government’s new plan to bypass the sanctions. Referring to US sanctions
against Iran, he said in the new situation, border countries and border
cities can turn into corridors of Iranian business with the world. He urged
the authorities in the border provinces to become more active in this field.

However, the Interior Minister Abdol-Reza Rahmani Fazli was more transparent
and said, “The government’s policy is to boost trade in the border areas.”
He said in the current situation, border regions should assume more
responsibility; under the sanctions, we should try to have the highest
exchanges with neighboring countries in the border regions.” According to
the minister, new guidelines will be communicated in this regard. As he has
said, the government apparently intends to strengthen border trade through
the markets and the traffic of local businessmen. “We hope that the people
of the border areas will use their capacities and strengthen the existing
trade route,” he emphasized.

UAE: In Favor of the Sanctions or Worried about the Future?

On the path to trade with neighbors, one way to reduce the pressure of the
sanctions is to clarify the role of the United Arab Emirates, because it is
one of the main trading partners of Iran and, of course, plays more a
mediating role in Iran’s trade with other countries. Over the past two
decades, by creating transportation infrastructure and banking
communications, it has been able to play the main role in Iran’s trade with
the world. UAE’s support for the anti-Iran sanctions is not unexpected but
would be costly. Some other countries, especially Turkey and some of the
northern neighboring countries of Iran, can reduce the UAE’s share of trade
with Iran. A review of Iran’s trade trends over the past 10 years shows that
the volume of Iranian exports to the UAE following trade agreements with
other countries has the potential to go down.

Turkey: The Alternate Route

The alternative route for Iran to replace the UAE is to expand its business
cooperation with Turkey, because Tehran and Ankara do not have major
disagreement over trade. The 25% share of Turkey in trade with Iran among
its neighbors and 17% of Iranian exports to Turkey among neighbors shows
that there are still incomplete capacities for trade development. Meanwhile,
the banking and currency transfer channels, especially after Tehran-Ankara
agreement on trade with the national currencies of the two countries, can be
a platform to save trade between the two neighbors from the sanctions.
Declining differences between the two neighboring countries, especially in
the area of ​​regional disputes, will be a win-win game for both Iran and
Turkey, but the dependence of bilateral trade on the land borders and some
outstanding differences on preferential tariffs continue to prevent the
volume of the two countries’ trade from reaching the projected 30 billion
dollars.

Customers in Danger

Obviously Iraq and Afghanistan are the two main customers of Iran’s export
goods and services these years, one in east of Iran and the other in the
west. Perhaps the government’s goal in boosting trade through strengthening
of border markets is the strengthening of trade corridors between Tehran and
Kabul in the east and Tehran and Baghdad in the west. To maintain Iran’s
current share from the two nations is hard and more difficult in the Iraqi
market. The weak Afghan economy and the lack of infrastructure for transport
and banking are a challenge, and the absence of serious rivals in the Afghan
market is an opportunity. The structure of the Iraqi market, however, is
different and full of challenges; on the one hand, serious rivals, including
Turkish goods and on the other hand the conflicting behaviors of the Iraqi
provincial authorities neighboring Iran will be disruptive, but it seems
that Iran does not want to lose its two main markets, Afghanistan and Iraq
at any cost.

The key to the future of trade depends on maintaining security in the three
countries of Pakistan, Afghanistan and Iraq and, of course, massive
investment to build transport lines and border infrastructure to reduce the
problems and gaps.

Positive Signals from the North, Negative Signals from the South

Political
pulses indicate positive signals in favor of more trade with the Caspian
littoral states, but the signals on trade with the Persian Gulf states do
not agree much with the policy of expanding trade with Iran. Although Iran’s
foreign policy is to improve relations with its neighbors, disputes over the
regional issues with the Persian Gulf states and its southern neighbors,
including Saudi Arabia, Bahrain and even the UAE, can make trade routes
bumpy. Although the markets of countries like Qatar and Oman are still more
attractive it seems that in northern Iran, the focus is on developing trade
with Russia. This is while trade routes are not smooth, and trade
facilitation with the northern neighbors, depending on bilateral and
multilateral relations with the Caspian Sea and other northern neighbors,
can help resolve the problems.